Marketplace Shows Indicators of Life After Death

Another volatile week of trading evidenced by the ten sectors with the S&P 500 index split decision - five winners and five losers. Let's first start with the winners as it was tale with the previous losers taking on a leadership role. The biggest winner of the week was Energy led by crude oil moving near the $47 mark or a gain of nearly 12%. S&P Select Energy SPDR ETF (NYSE: XLE) gained 9.3% and the ETF is showing indicators of breaking out with the consolidation pattern that has developed over the ten weeks. This is one ETF to add to your watch list this week to see how it plays out.
Related to the Energy sectors was Basic Materials. The S&P Select Basic Materials SPDR ETF (NYSE: XLB) gained 5.3%. The chart shows a break with the short term downtrend line near $23. If the trend in oil continues I expect this sector to tag along for the ride.
Some strength in the Technology sector helped lead the NASDAQ index higher by more than 2% for the week. Why the sudden leadership from technology? Cash on the balance sheet is as simple an explanation as I could find. Many of these companies have large cash balances which puts them in a position of not needing credit. Considering the condition of the financial sector, that is perceived as a plus if and when the economy rebounds. This sparked renewed interest leading the sector higher. iShares GS Semiconductor ETF (NYSE: IGW) gained 4.7% last week. This has been added to my watch list for a break above the 50 day moving average. We need leadership from other sectors with the marketplace and technology would be a great addition.
The other leaders were Utilities up 1.5% and Telecommunications up 1.1%. If these five continue to show strength this week, look for the current bounce off the November 20th low to continue and challenge the November 4th high. These sectors could provide the missing leadership needed.
Taking a look at the other side of the coin, the losers were led by Financials. This volatile sector has driven most investors to drink or to the poor house. S&P Select Financial SPDR ETF (NYSE: XLF) was down 5.3%, but fell more than 11.2% from the close on Monday last week. Unless you have a crystal ball that shows the volatility over in this sector it is tough to play. Oppenheimer's research analyst stated last week that the big 5 banks would not be profitable or grow for the next 18-36 months. That kind of data hasn't helped the outlook for the sector and for now I am willing to watch it from the sidelines.
The other losers were Consumer Staples, Consumer Discretionary, Industrials and Healthcare. Two of these sectors are of interest to me looking forward. Consumer Discretionary (NYSE: XLY) and Healthcare (NYSE: XLV). Both have shown signs of improvement and are worth keeping on your watch list. Below is a complete list of the 10 sectors of the S&P 500 index ETFs. Use the list this week to track the movement and potential opportunities.